Hong Kong Exchange Launches MSCI China A 50 Connect Index, Gives Investors Additional Tool to Manage Portfolio Risks
26th August 2021 | Hong Kong
Hong Kong Exchange (HKEX) is launching the MSCI China A 50 Connect Index on 18th October 2021, the first China A-shares derivatives product providing international investors with a new risk management tool to manage their portfolios of Stock Connect eligible China A-shares. The MSCI China A 50 Connect Index (futures contract licensed with MSCI), tracks the performance of 50 key Shanghai and Shenzhen stocks available via Stock Connect. In an ongoing partnership with MSCI, HKEX has already launched a total of 41 derivatives based on MSCI indices and in 2020, launched a suite of MSCI Asia and Emerging Market futures and options. Hong Kong Stock Connect allows investors to access Mainland China’s equity markets. (HKEX ~ Hong Kong Exchanges and Clearing)
“ Hong Kong Exchange Launches MSCI China A 50 Connect Index, Gives Investors Additional Tool to Manage Portfolio Risks “
The MSCI China A 50 Connect Index is designed to have a comprehensive representation of the Chinese economy by including 50 stocks of the largest stocks in the China A-share large-cap universe, and by targeting at least two stocks from each sector. The index comprises 50 Stock Connect eligible underlyings and historically has a high correlation to the performance of main MSCI A-share indices.
Stock Connect
Since its launch in 2014, Stock Connect, the landmark mutual market access programme linking the Hong Kong and Mainland China equity markets, has become the key channel for international investors to access the A-shares market and has helped facilitate the inclusion of Chinese A-shares into key global indices.
Stock Connect trading volumes reached fresh records in the first quarter of 2021, with average daily turnover of Northbound and Southbound trading significantly increased to RMB126.8 billion and $60.8 billion respectively.
HKEX Chief Executive Officer Nicolas Aguzin:
Today’s announcement marks a key step forward in furthering our plans to build an offshore Mainland China equities derivatives suite in Hong Kong. This exciting news further strengthens our long-term partnership with MSCI and reflects our commitment to developing Hong Kong as Asia’s premier derivatives hub, expanding the breadth and depth of our product offering in Hong Kong.
As the global markets leader in the Asian timezone with a unique role connecting China and the world, we believe this new product will act as a key risk management tool for investors in managing their A-share equity exposure.”
MSCI Chairman and Chief Executive Officer, Henry Fernandez:
“The importance of China in global investment portfolios is growing, evidenced by the country’s market capitalisation weight in the MSCI Emerging Markets Index increasing from 18 per cent in December 2009 to 34 per cent in August 2021. The investment industry is undergoing significant transformation and investments are becoming more complex and diversified, leading to a rise in demand for enhanced trading and risk management solutions. As part of our commitment to empowering global investors to better manage their portfolios, we are very pleased to expand our partnership with HKEX through this new license agreement.”
Hong Kong SFC Chief Executive Officer Ashley Alder:
“This A shares index futures contract provides a significant new risk management tool for the growing number of global investors who participate in China’s A shares market, including those trading through Hong Kong’s Stock Connect mechanism. The ability to trade A shares futures in Hong Kong, and to hedge pricing risks effectively, is expected to facilitate the further growth of long term capital flows into the Mainland financial markets.
The new contract is a major milestone in the development of Hong Kong’s capital markets, strengthening its position as a financial risk management and China market access centre of international significance.”
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About HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) is one of the world’s major exchange groups, and operates a range of equity, commodity, fixed income and currency markets. HKEX is the world’s leading IPO market and as Hong Kong’s only securities and derivatives exchange and sole operator of its clearing houses, it is uniquely placed to offer regional and international investors access to Asia’s most vibrant markets.
HKEX is also the global leader in metals trading, through its wholly owned subsidiaries, The London Metal Exchange (LME) and LME Clear Limited. This commodity franchise was further enhanced with the launch of Qianhai Mercantile Exchange (QME), in China, in 2018.
HKEX launched the pioneering Shanghai-Hong Kong Stock Connect programme in 2014, further expanded with the launch of Shenzhen Connect in 2016, and the launch of Bond Connect in 2017.
Visit: www.hkexgroup.com
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